IMF Working Papers

Resource Misallocation and Productivity: Evidence from Mexico

By Florian Misch, Christian Saborowski

May 15, 2018

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Florian Misch, and Christian Saborowski. Resource Misallocation and Productivity: Evidence from Mexico, (USA: International Monetary Fund, 2018) accessed November 13, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper explores the role for specific structural distortions in explaining Mexico’s weak productivity growth through the resource misallocation channel. The paper makes two contributions. First, we validate the approach of measuring misallocation indirectly (Hsieh and Klenow, 2009) by illustrating a close correlation between misallocation and per capita incomes across Mexican states. Second, we exploit the large variation in resource misallocation within industries and across states together with unusually rich data at the firm, local, and industry level to shed light on its determinants. We identify several well-defined distortions that have a statistically and economically meaningful effect on productivity via resource misallocation.

Subject: Corruption, Crime, Labor, Production, Productivity, Total factor productivity

Keywords: Corruption, Dependent variable, Distortions Author’s, Global, Industry-state pair, Market concentration, Output wedge, Productivity, Resource misallocation, TFP gain, Total factor productivity, Wage bill, WP

Publication Details

  • Pages:

    32

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2018/112

  • Stock No:

    WPIEA2018112

  • ISBN:

    9781484353578

  • ISSN:

    1018-5941

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